Maui Real Estate Blog
Too Good to Be True?
When searching MauiRealEstate.com for properties, you may occasionally come across deals that appear to be too good to be true. Land listed for $100,000, a beautiful condo across the street from the ocean for $250,000 or a home on significant acreage for $500,000. While I would like to say there were opportunities like this on Maui, the reality of our market is different. Well then what explains these listings? For the most part, these too good to be true listings are either Molokai Properties, fractional ownership, leasehold or residential condominiums.
- If you see raw land for sale in the $100,000 range, chances are that it is not on the island of Maui. Our website pulls listings from the Multiple Listing Service of the Maui Board of Realtors. Those listings are for all of Maui county. Maui county includes the islands of Maui, Lanai and Molokai. Molokai is a unique island located to the North West of Maui. Sometimes, it feels like it is half a world away. While it boasts considerable natural beauty, it is very different than Maui. Molokai receives limited tourist traffic and many of the residents prefer it that way. As a result demand for real estate is not near as strong as on Maui. Most of the lower priced land listings for Maui County are on Molokai. Oceanfront Condos are also less expensive. Fee Simple Oceanfront condos in Molokai start in the low to mid $200,000s. At this time, there are no comparable condo or land listings in Maui in these price ranges. Properties listed from Molokai can be identified by their district in the search results.
- If you see condos with two bedrooms and a lot of amenities in the $200,000-$300,000 range on Maui, it is more than likely that the condo is offering fractional ownership. This is a different animal than timeshares where you are purchasing 1 week of use a year. Fractional ownership gives you a stake in the condo. Use of the condo ranges anywhere from a couple of months to nine months of the year. There have been a couple of condos that offer fractional ownership that have received a number of inquiries as of late. Properties like this one, in a high end complex with amenities like a great location, pool facilities and garden like grounds would run anywhere from the $700,000 range on up if they offered full ownership. Fractional ownership could be an interesting way of getting into some condo complexes that would otherwise be out of your financial means. However, it is worth noting that fractional ownership purchases generally can not be financed unless owner financing is offered.
- Condos are not the only fractional ownership properties on the market in Maui. There are some homes in rural areas of East Maui, Upcountry and the North Shore that are called Hui properties. Hui properties were popular in the 60s and 70s when groups of friends and/or families pooled together to buy larger plots of land. The individual owners would get a share of the land and build their own home. You will occasionally see properties on the market where one of the Hui members is getting out of the property. The acreage for these listings often reflects the total acreage for all the owners. As with fractional ownership condos, these properties can only be purchased with cash unless the owner is offering owner financing. Fractional Ownership is identified in listings under the percentage ownership header.
- Leasehold ownership is another thing to be aware of when browsing MLS listings. Leasehold condos tend to be anywhere from 20% to 50% lower in value than comparable fee simple properties. While leasehold ownership can be a great way to get more property for less money, it can pose financing challenges. Properties with 35 years or less on their lease become increasingly difficult to finance. Leasehold vs. Fee Simple ownership is identified for listings under the price section.
- Sometimes you will see properties on Maui that show considerable acreage with a home for a relatively low price. If these properties are residential condos, the acreage for the individual condominium home may be less than what appears on the listing. It is common practice on our MLS to give the acreage for the entire condominium property regime rather than the individual condo home. For example, you may have 6 condos on 3.5 acres. The individual condo listed in that complex may show as having 3.5 acres. The reality is that much of that 3.5 acres can be common area shared among all 6 condos with a smaller area of exclusive use that is reserved for the private use of the individual condominium home. Residential condos are identified under property type.
If you see any properties on our site that appear to be too good to be true, but you can’t tell if it fits one of the four categories identified above, don’t hesitate to contact the Jalbert brothers for assistance.